Coronavirus Florida: Feds say West Palm company misled investors by claiming it had thousands of N95 masks

Julius Whigham II @JuliusWhigham

Wednesday

Apr 29, 2020 at 8:51 AM

The Securities and Exchange Commission said that the Praxsyn Corporation deceived potential investors and buyers by claiming to have protective masks it did not.

A health-care company with ties to West Palm Beach and its CEO have been accused of exploiting the coronavirus pandemic and committing fraud by falsely representing the company’s ability to acquire and supply protective surgical masks, federal authorities said Tuesday.

In a federal court filing with the Southern District of Florida, the U.S. Securities and Exchange Commission alleged that the Praxsyn Corp. and its chief executive, Frank J. Brady, 45, misled investors and buyers in late February and early March by claiming the company was negotiating the sale of millions of N95 masks that, in reality, the company did not have.

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The company’s stock trading volume increased significantly after it sent multiple news releases with the fraudulent claims, federal authorities said.

Praxsyn is a Nevada corporation with its principal offices in West Palm Beach, according to the federal complaint. Brady’s primary residence is listed as being in Atlanta.

Attempts to reach Brady for comment Tuesday evening were not successful.

The SEC complaint alleges that Praxsyn began issuing news releases in late February stating that it was negotiating the sale of masks that met the standard for N95 masks and was "evaluating multiple orders and vetting various suppliers" in order to guarantee a supply chain that could deliver the masks on a timely schedule.

"As alleged in the complaint, in the midst of the ongoing COVID-19 pandemic, Praxsyn and Brady sought to exploit unsuspecting investors by issuing false and misleading press releases concerning Praxsyn’s ability to source and supply N95 masks for the COVID-19 virus," Eric I. Bustillo, director of the SEC’s Miami Regional Office, said in a prepared statement.

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Authorities say Praxsyn sent another release in March reporting that it had acquired a large number of N95 masks and had created a "direct pipeline from manufacturers and suppliers to buyers," according to the federal complaint. Brady reportedly stated that the company was accepting orders for a minimum of 100,000 masks.

Only after various regulatory inquiries and questions raised by one of Praxsyn’s directors did the company admit it never had masks to sell, authorities said.

A profile on the Bloomberg.com business site lists Praxsyn as a health-care company that provides transdermal creams and ointments to medical practitioners and patients for treatment of long-term pain.

The SEC’s Office of Investor Education and Advocacy previously issued an investor alert cautioning investors to be aware of COVID-19 scams.